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Interesting Thought

So, I had an interesting thought…

Several years ago, when we started investing in Energy with an overweight position in client portfolios, I noted that at the end of the last energy bull market the energy sector made up > 20% of the SP500 in terms of market cap. I mentioned in one of my newsletters that we would likely be in an energy bull until it made up at least 20% of the SP500. Today, they are around 15% of the SP500.

When we started overweighting energy, it was less than 10% of the SP500.

As I look at things from a macro perspective, oddly enough, the Financials sector was > 20% of the SP500 at the time that the energy sector was less than 10%.

It sure looks like with the blow up on the financials of late, we are in a situation where financials are headed to 10% and energy is headed to 20%.

Despite the ups and downs in energy stocks it sure seems that we have a long way to go before the bull market in energy stocks ends. It also seems that maybe one of the new Ultra Short Financials ETF’s ( like Ultra Short Financials Proshares – ticker SKF) would be a smart way to play the likely shrinking of the financials sector.

Mark